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Thursday, June 2, 2011

German business has vested interest in Qatar's 2022 World Cup

German business stands to lose substantially if questions about Qatar's World Cup bid campaign were to lead to the Gulf state being deprived of the right to host the 2022 tournament.

Allegations of bribery by Qatar have been swirling around for months and are at the heart of the corruption crisis that has engulfed world soccer body FIFA.

Suspended Asian Football Confederation president Mohammed Bin Hammam, a Qatari national with close ties to the country' ruling family, is under investigation for having bought votes for his FIFA presidential election campaign. Mr. Bin Hammam, who withdrew his candidacy earlier this week, was closely associated with Qatar's World Cuo bid campaign.

German business is likely to have cringed when German soccer federation Theo Zwanziger called Wednesday for FIFA to re-examine how Qatar won the Cup.

"There is a considerable degree of suspicion that one cannot simply sweep aside, and I must expect that awarding this World Cup under these conditions needs to be examined anew," Zwanziger told German television.

The stakes are high for German companies.

Qatar has allocated on average 40 percent of its annual budget to infrastructure for the next five years and German companies have or expect a significant chunk of the associated business.

Much of the infrastructure, including a $11 billion airport, and a $5.5 billion deep water seaport will be built irrespective of the World Cup.

Bank of America Merrill Lynch estimates nonetheless that Qatar will spend some $65 billion on the tournament, including nine new stadiums and renovating three existing ones.

Eight of those stadiums expected to have futuristic designs, introduced revolutionary cooling technology to cope with Qatar's scorching summer temperatures and be dismantable so that they can be donated to poorer nations after the World Cup were designed by German architecture firm Albert Speer & Partner GmbH (AS&P).

German railways, Deutsche Bahn, is building a $ 24 billion, 320-kmtrain system in Doha, the Qatari capital. The project, one of the biggest foreign deals in German industrial history, will link the World Cup stadiums and is scheduled to be completed in 2026, four years after the Cup.

Germany's largest builder Hochtief is expected to build Qatar's $467 million flagship project, Lusail City. The development, named for a desert flower, will transform a desert sand mountain into a verdant 38-sq km city 200,000 people, including a separate rail network with 27 train stations, as well as an 8.5 kilometer shopping arcade with 600 new retail units, 1,300 residential units and offices.

Hochtief is also involved in the planning fora 40-kilometer that would link Qatar to the Gulf island of Bahrain.

Hochtief is likely to bid for the construction of the new stadiums once tenders have been issued.

German conglomerate Siemens and steel group ThyssenKrupp are also expected to do well out of Qatar's World Cup preparations.

Qatar has long been building close ties to German business. Qatar has a joint venture with Deutsche Bahn to develop the metro and national rail network. The country's sovereign wealth fund has a 10 percent stake in Hochtief.

German Chancellor Gerhard Schroeder's 2005 visit to Qatar created the basis of their relationship with Qatar's $9.89 billion purchase of a 10 percent stake in Porsche Automobil Holding four years later.

The relationship has paid off for Germany in different ways.

When Spain's largest building firm Actividades de Construccion y Servicios, S.A. (ACS) launched a hostile takeover bid for Hochtief last year, German Chancellor Angela Merkel arranged for a senior Hochtief executive to be introduced to Qatar's economy minister at a reception hosted by Germany's President Christian Wulff.

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About Me

James M DorseyWelcome to The Turbulent World of Middle East Soccer by James M. Dorsey, a senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies. Soccer in the Middle East and North Africa is played as much on as off the pitch. Stadiums are a symbol of the battle for political freedom; economic opportunity; ethnic, religious and national identity; and gender rights. Alongside the mosque, the stadium was until the Arab revolt erupted in late 2010 the only alternative public space for venting pent-up anger and frustration. It was the training ground in countries like Egypt and Tunisia where militant fans prepared for a day in which their organization and street battle experience would serve them in the showdown with autocratic rulers. Soccer has its own unique thrill – a high-stakes game of cat and mouse between militants and security forces and a struggle for a trophy grander than the FIFA World Cup: the future of a region. This blog explores the role of soccer at a time of transition from autocratic rule to a more open society. It also features James’s daily political comment on the region’s developments. Contact: incoherentblog@gmail.comView my complete profile